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Interest rates held at record 0.5% low

by: Paloma Kubiak
  • 14/04/2016
  • 0
Interest rates have been held at 0.5% for the 85th consecutive month, the Bank of England announced today.

The Bank of England’s Monetary Policy Committee (MPC) voted unanimously in favour of maintaining the 0.5% base rate, which means interest rates remain unchanged for over seven years.

It cited weak global supply growth, the unexpected increase of CPI inflation to 0.5% in March and the depreciation of sterling as reasons behind the decision.

The Monetary Policy Committee (MPC) said returning inflation to the target rate of 2% would be done gradually and it expects to reach this in around two years where the figure will be held “in the absence of further shocks”.

For industry commentators, the decision to hold rates came as no surprise amid the International Monetary Fund downgrading its UK economic growth forecast and uncertainty surrounding the Brexit referendum.

Jeremy Duncombe, director, Legal and General Mortgage Club, said while the decision is good news for many homeowners, it is vital that potential borrowers and those looking to remortgage do not get complacent about rock-bottom rates.

“The temptation to delay looking at new mortgage deals should be ignored, as mortgage rates are not directly linked to base rates. Anyone who is thinking about remortgaging should therefore speak to a broker now to find out about the best product for their individual circumstances, before these deals disappear.”

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